Microsoft enjoyed some happy holidays, thanks in part to the launch of the Xbox One. The company today released its quarterly results for the three months ended December 31, 2013, revealing company-wide sales up 14 percent to $24.52 billion, with a net income of $6.56 billion, up a little less than 3 percent year-over-year.

As for the Devices and Consumer segment of which Xbox One is a part, sales were up 13 percent to $11.91 billion. The Xbox One played a significant part in that number, as Microsoft said it shipped 3.9 million units into the retail channel during the quarter. Earlier this month, Xbox corporate vice president Yusuf Mehdi confirmed 3 million Xbox One systems had sold through to consumers by the end of 2013. That puts the machine a bit behind the PS4, which had sold through 4.2 million systems worldwide by year's end.

While Microsoft's new hardware made its mark, its old hardware continued its decline. Microsoft shipped an additional 3.5 million units of its legacy console, down 40 percent from 5.9 million consoles in the holiday 2012 quarter. That number was in itself down 28 percent from holiday 2011. Despite that, Xbox Live is still going strong, with transactional revenue on the service up 25 percent for the three months.

"Our Commercial segment continues to outpace the overall market, and our Devices and Consumer segment had a great holiday quarter," outgoing CEO Steve Ballmer said. "The investments we are making in devices and services that deliver high-value experiences to our customers, and the work we are doing with our partners, are driving strong results and positioning us well for long-term growth."

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Thats good. Im a Playstation and Nintendo guy. But Im also rooting for microsoft simply because competition is healthy for any business, keeps everyone on there toes, trying to out do the other, which results in better products. And although these numbers are lower han SONY's, I can hardly consider this a failure.

@Andreas - You say it's hurting them, but they've only got so much manufacturing capability, so even if they released in more territories they wouldn't have any more stock, so if anything I think it'd just make the existing stock spread even more thinly. For now I think the only real factor is how quickly can they make the things and get them to the shops.

It's early days; inventory driven sales always give a false account of consumer demand but don't forget that not only stock availability and launch timings impacted the results but also the respective prices of the boxes which also gave PS4 an advantage.

I have heard anecdotally that there was more Xbox One stock in Europe in the last few weeks of December than PS4 so as an example region, this would support shipments being higher than consumer sell-through for Xbox.

According to Sony, their shipped numbers were only 4.2M. That's a pretty close gap.

And I know from friends in retail that the X1's you see on shelves are not the same every time. It's just much easier to replace them as they're shipped domestically. The PS4 has to be replaced from other regions of the planet, which is hurting their stocking of the console. MS was smart to do a smaller launch to restrict the supply to high-demand regions.

If Microsoft says shipped on Friday, expect Sony to one up them with a higher number sold by Monday.

The tantalizing question is whether both consoles can keep the pace, or start to decline. Sony still seems to have the edge when it comes to consoles being sold out instantly. If you want an Xbox, you can pretty much buy it anywhere.

Considering we already saw from sales trackers reporting end of year sales that Microsoft exaggerated 3 million sold through by a good 300K or so, it appears that there were well over 1 million unsold Xbox Ones on shelves around the world before the holiday rush was even over.

Edited 1 times. Last edit by Nicholas Pantazis on 24th January 2014 5:42pm

I still expect both consoles to keep up a similar pace. I see them both passing the Wii U by the end of March, which is pretty good for consoles that have been on the market for less than 6 months in fewer territories. Dead console market, indeed.

I see more legs in the X1 and PS4 than the Wii U. InFamous and Titanfall are good hype, and that'll snowball into E3 (where Nintendo bombed worse than '08). If MS/Sony do a mediocre show, they'll definitely have beaten Wii U sales by August. March is just my early guess if Titanfall/InFamous are selling well.

@Davis Serrano: "XBO as a set top device vs. the percentage primarily using it as a gaming device? "

Interesting as a question meaning 'how many buyers stopped playing (and buying) games already" on their XBox. It would be pretty frightening if that's >0: But it's hard to believe anyone bought such an expensive (and badly supported outside the US) device primarily for it's media features, with very capable dedicated connected media boxes at 20% of the price.

The media side is definitely where MS want to position XB1 but it's a short term (and largely imaginary) sales differentiator with PS4. It's reasonable to assume all current sales are from gamers.

@Nicholas. Since Wal-mart does not report sales, and they and a best buy were the primary recipients of restocks, where is your information coming from that they over reported? I would be more confident in that if WM wasn't so heavily factored. It wouldn't be the first time Microsoft was caught lying about numbers mind you, but I just want to see what supports that

@David and Paul

I think it's safe to say that virtually no one who is buying X1 at this point in time is buying a media box. That likely will change this coming Fhristmas however, as they start bundling the system with cable and internet subscriptions

Anyone who thinks that the media side isn't going to be big isn't versed in the media side. There are literally millions of idiots paying $60 a year to watch Netflix, and. Media is pulling more hours than gaming. With Verizon starting up an IP based cable network, you can bet MS is going to be all over that.

@Nick - I'm not sure it was a question of Microsoft being smart, it was a question of needs must - it couldn't produce enough for a wider launch and even in the territories it launched in, it fell behind PS4. PS4 overtook Wii U installed base in Western markets if the 4.2m number is correct as consumer sell-through; Xbox One was not far behind and has overtaken the Wii U in many markets. By the end of March, I am confident both PS4 and Xbox One will each have surpassed Wii U in the Western World if not on a global basis as well.